Friday, September 18, 2009

Although the real estate sector is the first in the country to fuel to the recent economic growth in the country, it is also probably the last in the recovery wheel, said senior government officials.

The Dubai Police Chief, Lt. Gen. Dahi Khalfan Tamim, said that the recovery path of the real estate sector is very slow and will not happen before end of 2010.

According to Tamim, greed and irresponsibility, coupled with aggressive lending by banks are the main causes of the economic downturn.

"These investing companies focus only on setting up companies and begin collecting profits and do not care about anything else," he added.

Tamim explained that several of the UAE companies lack risk-management mechanism, and hence, they failed to manage the downturn.

The Director-General of Department of Economic Development, Sami Al Qamzi, said that this is a year of challenges and hence it is very difficult to pinpoint a time for recovery. However, the property sector may not start recovery process before end of 2010. But, the growth in retail sector, which constitutes 38 percent of UAE economy, has already begun and is very fast.

He explained that 30 percent of real estate market is real, while 70 percent is speculation. But with the market correction, majority of market will turn real. After 2006, the economic growth in GCC and particularly in real estate sector has been unrealistic. There are several projects and the market requires time to absorb them. The real estate sector will be at the end of the recovery path.

With the support of government coupled with good management, economic recovery will happen, although at a slow pace, he added.

Dubai Government officials too, blamed bankers for the current economic crisis, and said that their aggressive and irresponsible lending has led to the present economic situation.

The wrong policies adopted by banks are the main cause for the growing economic slowdown, which in turn, affected several related sectors, and among them real estate sector was the first, they concluded.